RUSSIAN FEDERATION WEEKLY SITREP 29 April 2010

UKRAINE-RUSSIA. The big news is, of course, the cheap gas for base agreement announced last week. Russia/Gazprom (is there a difference?) will knock 30% off the going rate and the Sevastopol lease will be extended to 2042. I don’t think that this is a very good deal for either side: Moscow will pay more than it would cost to build a new base in Russia and Ukraine will have another period of cheap gas that it will probably use no more wisely than it has for the last 20 years. Plus all the complications of a foreign (and sovereign) military base on its territory. (Although apparently forbidden by Art 17 of the Constitution, the Constitutional Court approved it). And, ten years down the road, a differently flavoured government in Kiev may seek to reverse the base agreement. On the other hand, as I suspected, Ukraine has been paying its gas bill with IMF loans and, by all accounts, is pretty close to bankruptcy (this seems to be Yanukovych’s justification). Another benefit is that the price of gas for Ukraine is known for a long time in the future, so downstream customers of Russian gas should be spared the tense negotiations between Kiev and Moscow. The old base agreement had Moscow give credits; this time it will pay cash (and more). So everything is more transparent. The agreement appears to have opened up other possibilities of mutual trade and cooperation so there may be good effects over time. The Ukrainian opposition is furious, of course, but a poll suggests that the agreement has good support in the country.

POLAND-RUSSIA. Russia’s sympathetic and transparent response to the tragedy has opened the possibility of better relations. As the Archbishop of Krakow said at the funeral: “The sympathy and help we have received from Russian brothers has breathed new life into a hope for closer relations and reconciliation between our two Slavic nations.” Today Polish PM Tusk said there will be no “sensational revelations” from the black boxes.

YOUR WEEKLY SMILE. The NATO Secretary General criticised Russia’s new military doctrine for “old-fashioned Cold War rhetoric” because “it states that NATO constitutes a major danger, at least, which is not the reality. NATO is fast becoming purely a “rhetorical” organisation in which the only reality is its statements. Oops! new reality: now Russia’s military doctrine is “balanced”. As Humpty-Dumpty said: “When I use a word, it means just what I choose it to mean”.

SOUTH STREAM. This project appears to be ready to go: Austria has signed on and contracts are beingissued. The line will carry gas from Russia under the Black Sea to Bulgaria and westwards.

CORRUPTION. An aide to the Ground Forces Commander has been sentenced to 9 years for fraud.

Weaponry. Foreign purchases develop: there is a plan to establish a joint venture with Israel for production of UAVs and it looks as if Russia will buy one or moreMistrals.

HISTORY WARS. Yanukovych made a historically correct statement on the Holodomor: “The Holodomor was in Ukraine, Russia, Belarus and Kazakhstan. It was the result of Stalin’s totalitarian regime. But it would be wrong and unfair to recognise the Holodomor as an act of genocide against one nation”. PACE agrees. Not a Russian attempt to exterminate Ukrainians, it was a Communist attempt to exterminate independent farmers.

KYRGYZ REPUBLIC. Bakiyev is now in Belarus and surrounded by confusion: on the one hand he says he’s still President, on the other that he won’t be back. Lukashenka seems to support him but as far as Moscow is concerned Bakiyev resigned). The interim government seems to be determined to put people on trial (the former Interior Minister was picked up in Moscow, flown to the Kyrgyz Republic – to Manas: can we assume Washington’s cooperation? – and promptly arrested), they also want to put Bakiyev on trial. A draft constitution has been produced for a referendum on 27 June. It is designed to reduce the chances of one-man domination and cooked elections. There were some violent protests over the last couple of weeks but they seem to be unconnected with each other. For the last couple of days no disturbances have been reported although today there are reports of a separatism movement in the south. As usual, theories abound: the coup was orchestrated in Moscow, orchestrated in Washington or done by drug barons (roundup); the customary construction of bricks without straw. Certainly the interim government has been very fast off the mark which argues considerable pre-planning by somebody. There is some evidence that Washington was too close to the Bakiyev family’s stranglehold on money; if true, the US star will be setting in Kyrgyz Republic.